Oil prices drop as crude flows resume through Strait of Hormuz

• Global oil prices fell more than 1% following progress in U.S.-Iran peace talks to restore crude shipping flows.
• Brent crude futures decreased by 1.4% to $76.81 per barrel, while West Texas Intermediate dropped to $72.99 per barrel.
• Market analysts expect oil prices to remain under downward pressure as transit volumes through the strategic waterway increase.

Brent crude futures fell $1.09, or 1.4%, to $76.81 a barrel, while U.S. West Texas Intermediate crude declined 87 cents, or 1.2%, to $72.99 a barrel as of 0607 GMT.

The decline follows a more than 3% drop on Monday after the United States granted Iran a 60-day sanctions waiver and amid reports of reduced hostilities in Lebanon.

Two crude tankers carrying just under 2 million barrels of oil transited the Strait of Hormuz on Monday, according to ship-tracking data, signaling a pickup in traffic after weaker flows on Sunday.

"The gradual increase in oil flows through the Strait of Hormuz continues to weigh on the market," ING analysts said in a note.

Sparta Commodities’ head of research Neil Crosby noted that recent transits have risen sharply, which the market is viewing as a proxy for both physical supply and diplomatic progress.

"It feels like we will be stuck in this bearish risk-off/optimistic mood until such time as something changes," he added.

Analysts cautioned that deep-seated mistrust between Washington and Tehran may delay any full return to pre-conflict price levels.

Separately, U.S. Strategic Petroleum Reserve stocks fell to 331.2 million barrels last week, the lowest level since June 1983.

A Reuters poll ahead of weekly inventory data expected declines in U.S. crude, distillate, and gasoline stocks.